All of the following are problems caused by deflation except
A. Borrowers face an increased burden of debt
B. The real interest rate becomes higher than the nominal interest rate
C. Firms make higher profits as consumers buy more goods and services
D. Consumers postpone purchases in the hope of lower prices in the future
Answer: C. Firms make higher profits as consumers buy more goods and services
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If you deposit $8,000 in a bank, calculate how much the bank must keep as required reserves and how much it can loan out if the required reserve ratio was 5 percent. If it was 8 percent? 13 percent? 26 percent?
When marginal revenue is zero, demand will be:
A. inelastic. B. unit elastic. C. elastic. D. There is not sufficient information to classify the elasticity of demand.
An extra hour of market work is an attractive use of your time
a. because of the utility generated by goods made possible through the extra work b. solely because of the personal satisfaction it generates c. when the disutility of income generated by the extra work exceeds the utility d. when the net utility of the extra goods made possible and the extra work is greater than zero e. only when you do not enjoy leisure time
The simpler a production process is,
a. the greater the cost of production b. the greater the transaction cost of using markets c. the more likely a firm will use the market to organize production d. the more likely a firm will used centralized control to organize production e. the more likely that transaction costs increase by using centralized control of production